Partial closure of Xinfa smelter pushes up Chinese domestic aluminium by 4%

A Chinese smelter experiences partial closure due to technical faults which results in hike in the domestic price of the metal by nearly 4% this week as investors are desperate to compensate the deficit in supply.

A unit of Shandong Xinfa Aluminium Electricity Group went offline suddenly due to a major electrical fault shutting down the 400,000 to 500,000 tonnes capacity unit according to Wednesday’s Shanghai Securities News.

Investors immediately anticipated a shortage in supply in the near future thereby pushing up the prices. The most active aluminium futures contract in Shanghai saw a boost of nearly 4% on Wednesday with the price standing at 14,950 Yuan per tonne.

The 400,000 tonnes unit is likely to remain shut for the next two months for repairs according to analyst Wang Chunhui, however the senior executives in the company headquarters were unavailable for comment on the official status of the unit.

However, since the affected volume consists of only 1.7% of the total production of 23.72 million tonnes contributed by China, the closure will not likely to cause far reaching ripples in the market. A source, who did not wish to be named, from a state-owned smelter said, "The impact would be gone next week...the affected capacity is small."